Legislature(1997 - 1998)
03/09/1998 03:22 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 392 - REPORTS: FISH TAX & SALMON PRODUCTS Number 0385 CHAIRMAN ROKEBERG stated the committee's next item of business was HB 392, "An Act relating to access by the Department of Environmental Conservation and the Department of Fish and Game to confidential tax records for fisheries resources prepared or kept by the Department of Revenue under AS 43.75; relating to certain salmon products reports; and providing for an effective date." Number 0457 CHAIRMAN ROKEBERG called a brief at ease at 3:26 p.m. The committee came back to order at 3:28 p.m. Number 0463 REPRESENTATIVE HUDSON moved Version K of HB 392, labeled 0- LS1423\K, Bannister, dated 2/26/98, for discussion purposes. Number 0482 CHAIRMAN ROKEBERG stated, there being no objections, the proposed CS was before the committee. Number 0493 REPRESENTATIVE ALAN AUSTERMAN came forward as the sponsor of HB 392. He noted there had been a couple of small changes and one major change since the committee's previous hearing on HB 392. The major change was the deletion of the audit provision. Representative Austerman said there had been the issue of requiring an audit and having the negotiation agency come in and ask for an audit. He said they found that the harvesters had never really requested an audit. In his discussions with the Department of Revenue (DOR) he was told that DOR had the broad authority to do audits but had never been requested to do one. Representative Austerman noted there was the question as to who would pay for the audit if one was requested, but they decided it was best to remove the entire provision and advise the harvesters to request an audit. He said that then if the harvesters had problems, those problems could be identified, and it could be brought back at a later date. Representative Austerman noted the exemption of the very small processors, in the 240,000 pounds or less category, from the reporting requirements. He said they did not really feel it was necessary for these processors to be involved in the reporting requirements so that 240,000 pound cap was inserted. He noted they had discussed this a little bit with DOR. Representative Austerman said the harvesters, processors and DOR all agreed that was probably a good thing. Number 0643 CHAIRMAN ROKEBERG questioned if that had been the amendment before the committee at the previous hearing on HB 392. REPRESENTATIVE AUSTERMAN responded in the affirmative, stating that was part of the amendment before the committee last time and was incorporated into Version K. Number 0650 CHAIRMAN ROKEBERG referred to Section 3, page 2, where he said it provides, "The commissioner shall, upon request, furnish the Department of Environmental Conservation or the Department of Fish and Game copies of tax returns" and he asked Representative Austerman to explain the rationale behind that. Number 0671 REPRESENTATIVE AUSTERMAN stated he thought that was part of the attempt to consolidate the collection of basically the same information from the processors by three agencies. He said the processors would report to DOR, and DOR would then furnish information to the other departments if it was requested, noting the departments were currently receiving that information. Number 0708 CHAIRMAN ROKEBERG asked if there was someone present from the Administration to answer questions and said, "It says 'copies of the tax returns' -- if they're getting the information, is it the entire tax return that they need to provided 'em with ...?" Number 0735 PAUL DICK, Revenue Audit Supervisor I, Income and Excise Audit Division, Department of Revenue, came forward. He said DOR collects fishery business taxes and licenses fishery businesses. Number 0746 CHAIRMAN ROKEBERG referred to the nature of the information mentioned in Section 3 and the necessity for the Department of Fish and Game (ADF&G) and the Department of Environmental Conservation (DEC) to have that information. Number 0757 MR. DICK stated, as he noted Representative Austerman had said, that they were trying to consolidate the information so the fishery businesses would only have to report once to the state, commenting that currently the businesses are reporting basically the same information to three agencies. Mr. Dick said this "falls on the heels" of the already implemented consolidated licensing process, which was possible because licensing is public information. Mr. Dick indicated DOR would receive the information in the proposed consolidation, and then share it with the other two agencies because the tax information is confidential. Number 0814 CHAIRMAN ROKEBERG asked specifically what information were these departments looking for, noting it was certainly not the businesses' entire tax return. Number 0826 MR. DICK stated that ADF&G currently collects value and poundage information. He said DOR also collects this information and goes a step further by having the businesses multiply their value by a percentage to calculate the businesses' tax liability. Mr. Dick said the point would be to have the fishery businesses only report the information to DOR. He said because DOR's information is confidential and the department currently does not have authorization in statute to share that information with ADF&G and DEC, the businesses must report this information to each of the individual agencies. Number 0872 CHAIRMAN ROKEBERG asked if DOR couldn't just give the other agencies the specific information they were looking for and not the business's whole tax return. Number 0880 MR. DICK stated DOR could not under the current provisions of AS 43.05.230, its disclosure statute, which currently prohibits DOR from sharing that information with those departments. He noted there was a provision in AS 43.05.230 which specifically allowed DOR to share mining tax information with the Department of Natural Resources (DNR), and that is currently being done. He said DOR is looking for that kind of authorization to extend to ADF&G and DEC. Number 0916 REPRESENTATIVE AUSTERMAN referred to page 2, lines 24 through 27, "The Department of Environmental Conservation and the Department of Fish and Game shall maintain the confidentiality that the Department of Revenue is required to extend to the returns, reports, determinations, work papers, and other documents furnished under this subsection.", indicating he thought it explained that the confidentiality had to be maintained. Number 0924 CHAIRMAN ROKEBERG said he appreciated needing the authority to make a single report, noting he didn't see anything being repealed here and asked if the reporting requirements to DEC and ADF&G were currently in regulation. Number 0945 MR. DICK said he believed those were statutory requirements for those agencies. He said ADF&G has its commercial operator annual report which he believed was a statutory provision, and he said DEC collects summary-type information from the fishery businesses. Mr. Dick noted that summary information was what DOR would share with DEC. Number 0979 CHAIRMAN ROKEBERG stated it said "copies of the tax returns, reports, or other documents filed under [AS] 43. ..." He asked what AS 43.75 was. Number 0992 MR. DICK replied that was the fishery business tax. Number 0998 CHAIRMAN ROKEBERG asked, "Couldn't this be drafted in such a manner as that they would file their tax returns with your department and then you, in turn, would only give that information from their tax returns that these particular departments needed, rather than their entire tax return?" Number 1017 MR. DICK said that was unfortunately not the case; under AS 43.05.230 all information on the tax return is considered confidential, so if anybody were to request only certain parts of the information on any tax return, DOR could not disclose that information. He noted this was not just for the fishery business tax but for any tax return received through DOR. Number 1047 CHAIRMAN ROKEBERG stated that was not his question. He asked, "Why can't you just provide that part of the information which the DEC and fish and game wants ... without sending the entire tax return?" Number 1062 REPRESENTATIVE HUDSON stated he was looking at AS 43.75 which he said was pretty inclusive, and he asked if they weren't really talking about the fisheries business tax when they were talking about tax returns. Number 1079 MR. DICK responded in the affirmative. Number 1083 REPRESENTATIVE HUDSON suggested they specify AS 43.75.015 which would only refer, then, to the fisheries business tax. Representative Hudson said he thought he understood the Chairman's concern about releasing full tax returns, which was pretty comprehensive, and stated, " But if we were to relate that 'other documents filed under 43.75.015,' which would just apply then to the fisheries business tax, which is, I think Mr. Chairman, is what they're trying to get to .... If that would be pertinent, I think that would be a reasonable amendment." Number 1118 CHAIRMAN ROKEBERG asked Mr. Dick if that would be possible. Number 1122 MR. DICK said then, as he understood it, line 24 would be amended to specify AS 43.75.015. Number 1136 CHAIRMAN ROKEBERG said they would go up to line 21, stating, "You wouldn't furnish them with the copies of the tax return. You would furnish them with the reports required under 43.75, is that right Representative Hudson?" Number 1143 REPRESENTATIVE HUDSON replied that it would be the tax returns and reports required under AS 43.75.015 only, noting that he thought it was a separate business tax filing. Number 1158 MR. DICK stated that under AS 43.75.015 the DOR just collected tax returns, it did not collect reports like the current canned salmon reports. The information DOR was receiving under AS 43.75.015 was the tax return. Number 1173 CHAIRMAN ROKEBERG said possibly one of the sources of his confusion has been what tax return they were talking about, noting it was only the fishery tax return, not corporate or business tax returns. Number 1190 MR. DICK stated that was correct, the businesses' corporate tax return would fall under AS 43.20 and other tax returns fall under other chapters of Title 43. Number 1199 CHAIRMAN ROKEBERG asked if this particular tax return was a one- page document. Number 1205 MR. DICK replied it was probably a ten-page tax return because DOR collects a lot of information by species, pounds and value, which, he added, is also what ADF&G collects. Number 1219 CHAIRMAN ROKEBERG asked what DEC's interest was in this information. Number 1229 MR. DICK noted DEC would like to base its license fees on the processors' actual activity. Number 1235 CHAIRMAN ROKEBERG asked if DEC had a license fee for fishing. Number 1243 MR. DICK replied in the affirmative. He indicated every fishery business has to be licensed with DEC to meet certain water and air quality standards, and indicated other aspects of fishery business were also regulated by DEC. REPRESENTATIVE AUSTERMAN commented he thought DEC's license fee was up to approximately $1,200. Number 1259 There was a brief discussion which clarified that DEC licensed the fish processors, and that the tax returns in question were from the processors, not the fishermen. Number 1289 REPRESENTATIVE JOE RYAN said he, too, had an interest in the discussion involving the role of DEC. He asked if this would add to DEC's role as far as oversight was concerned, giving DEC more power than it currently has. MR. DICK responded he did not believe so. Number 1324 REPRESENTATIVE AUSTERMAN said DEC already has the authority to collect that report, and the attempt was being made to concentrate it into one reporting form so the processors do not have to report to three different agencies. He said those other two agencies would then be able to obtain that information from DOR. Number 1341 CHAIRMAN ROKEBERG asked if the drafter had examined the other statutes, noting he did not see a repealer. Number 1346 REPRESENTATIVE AUSTERMAN stated he had made a note to look that up. Number 1351 CHAIRMAN ROKEBERG commented it was nice to take laws away when they add them, particularly if an attempt was being made to consolidate something. REPRESENTATIVE AUSTERMAN noted if he found that those statutes could be repealed because of this, they would introduce it on the Senate side and get it done. Number 1362 REPRESENTATIVE RYAN commented on the zero fiscal note. He said his experience in the last two years has been that when the Administration wants to do something, it has zero fiscal notes, and when they want to do something, they get piled with all kinds of money, and he was just wondering how they were going to keep track of these extra reports and so forth without additional expenditures. Number 1388 CHAIRMAN ROKEBERG indicated he thought the sponsor said the reports were already required, so he assumed there would be no fiscal impact. Number 1398 REPRESENTATIVE HUDSON noted the committee had not had a formal discussion on AS 43.75.015. He asked if the Chairman would consider an amendment on page 2, line 22, after "43.75" add ".015" which, Representative Hudson said, would isolate it to the fisheries business tax, and all reference above that then would only relate to the fisheries business tax. He stated he believed there were other enhancement taxes in AS 43.75. Number 1452 CHAIRMAN ROKEBERG added that there was also a reference to it in line 24. Number 1457 REPRESENTATIVE AUSTERMAN said he didn't really see a problem with inserting that. REPRESENTATIVE HUDSON stated he would insert it in both places. The amended language would read: The commissioner shall, upon request, furnish to the Department of Environmental Conservation or the Department of Fish and Game copies of tax returns, reports, or other documents filed under AS 43.75.015, and copies of the Department of Revenue's determinations and work papers related to those documents filed under AS 43.75.015. REPRESENTATIVE HUDSON asked if the bill went to the House Finance Standing Committee next. CHAIRMAN ROKEBERG responded he believed this was the only committee of referral. Number 1469 REPRESENTATIVE BRICE stated that the suggestion might be to alter the language so that it read, "The commissioner shall, upon request, furnish to the Department of Environmental Conservation or the Department of Fish and Game copies of documents filed under AS 43.75.015, and copies of the Department of Revenue's determinations and work papers related to those documents." given that only one tax, AS 43.75.015, was being referenced there. He commented on the language "copies of documents filed under AS 43.75.015", asking if that was the information they wanted. CHAIRMAN ROKEBERG replied that was correct. Number 1533 REPRESENTATIVE HUDSON said it was all a matter of semantics, the two suggestions did the same thing. He stated, "I would say conceptual, Mr. Chairman, that we adopt '015' after '43.75' in the two locations and then if ..." Number 1552 CHAIRMAN ROKEBERG asked Representative Brice to make a formal motion on his suggested language. Number 1558 REPRESENTATIVE BRICE moved that they delete on page 2, line 21, "tax returns", on line 22, "reports, or other", and then add on line 22, "43.75.015", and then leave it to the discretion of the committee whether they wanted to add "015" on line 24 after AS 43.75. Number 1599 CHAIRMAN ROKEBERG said he thought those were separate things, noting those were the work papers. He asked Mr. Dick to speak about the work paper requirement. Number 1606 MR. DICK replied he believed that was addressing the situation where DOR has an examination or audit and DOR goes out and finds additional value or poundage related to the tax return. Number 1618 CHAIRMAN ROKEBERG said, "So like if there was an error in the return and you went and got further ... So we prefer to see that language remain in there ...." Chairman Rokeberg said he would like to add ".015" on line 24 to the amendment. He stated the amended section would then read: (i) The commissioner shall, upon request, furnish to the Department of Environmental Conservation or the Department of Fish and Game copies of documents filed under AS 43.75.015, and copies of the Department of Revenue's determinations and working papers related to those documents filed under AS 43.75.015. [NOTE: previous language contained "work papers"] Number 1658 CHAIRMAN ROKEBERG asked if there were any objections to the amendment. There being none, he stated the amendment was adopted. Number 1677 REPRESENTATIVE RYAN asked, regarding the work papers, et cetera, were they talking about DOR materials, or the materials of the person who submitted the return. Number 1680 MR. DICK stated that would be the DOR's work papers. Number 1687 REPRESENTATIVE RYAN noted the materials of the person submitting the return are not usually seen until a court subpoenas or orders them. Number 1697 CHAIRMAN ROKEBERG asked Mr. Lauber if these fixes made him feel any better. Number 1708 RICK LAUBER, Lobbyist for Pacific Seafood Processors Association, came forward to testify. He answered the Chairman's question in a strong affirmative. He said he certainly appreciated the work that had been done and he thinks it makes it a much better bill. He said the bill says much of what he was trying to express at the previous hearing. He noted there were two other things, but he was not going to ask this committee address them, indicating he had discussed them with the Chairman of the House Special Committee on Fisheries, Representative Austerman. Mr. Lauber said he thought the changes would be housekeeping in nature. He referred to page 4, lines 25 and 26, "(A) cash discounts allowed on sales, not to exceed one and one-half percent; and". He noted that was an old system, they now give 2 percent discounts for cash. Reiterating his desire not to hold up the bill's passage, he stated he was also interested in some provision to examine this three or five years down the line to see if it was being used. Mr. Lauber said if it was being used then leave it in place; if it was not, remove only the reporting part. He commented that it is three reports, noting he had previously objected to the change from two to three reports per year because of the extra workload. However, he said that was a small price to pay if it was going to help. Number 1844 REPRESENTATIVE HUDSON said he was prepared to offer the suggested amendment, stating, "On page 4, line 25, to change 'one and one- half' to 'two' percent, which is current." He said that would be a very simple amendment to make and then they would have taken care of it. Number 1868 REPRESENTATIVE AUSTERMAN stated he did not have a problem with that change, but would like to have time to discuss the sunset clause. MR. LAUBER added he certainly agreed. REPRESENTATIVE HUDSON clarified his statement had been a motion. Number 1887 CHAIRMAN ROKEBERG asked if there were any objections to the motion before the committee. Hearing none, he stated the amendment was so adopted. Number 1892 REPRESENTATIVE JOHN COWDERY made a motion to move Version K of HB 392, as amended, to the next committee of referral with individual recommendations and the attached fiscal note. Number 1910 CHAIRMAN ROKEBERG asked if there were any objections. There being none, CSHB 392(L&C) was so moved.
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